china’s silver consumers: growing opportunities for uk...
TRANSCRIPT
China’s Silver Consumers: Growing Opportunities
for UK Companies
1 Key Findings 3
2 OverviewofTheCause&SizeofChina’sAgeingPopulation 4
2.1 Workforce Demographics 4
2.2 Life Expectancy & Birth Rates 5
2.3 Rapidly Increasing Numbers 7
3 China’s Silver Consumers 9
3.1Attitudes,Behaviours&Values 9
3.2 Emerging Trends 11
4 OpportunitiesinKeyMarketSegments 12
4.1ElderlyCareProducts&Services 12
4.2 Consumer Products 15
4.3Travel,Leisure&Entertainment 17
4.4FinancialServices&Products 20
Contacts 24
References 25
Contents
Foreword from the CEO
This report is one of a series of CBBC consumer-focused reports, which have so far also included China’s MiddleIncome Consumers and E-commerce in China.
Todaytherearealreadyaround220millionpeopleinChinaovertheageof60,andthiswillriseto480millionby2050,representingathirdofChina’stotalpopulation.
The report looks at this rapidly growing and increasingly importantconsumersegmentthatmorethaneverbeforehasgreater spending power,more leisure time, improving life-stylesandhigherexpectations. It considers theirdemands,influencesandaspirations,andchangingconsumerbehaviour,to highlight some developing business opportunities andpotentialmarketgapsacrossdifferentsectors.
There are many opportunities for British companies, andmany of our world-class companies are well placed to meet this growing consumer demand in medicine, healthcare,financial products, health food, fashion, beauty products,travelandentertainment.
CBBCwillcontinuetoundertakeresearchintothissegment,as well as other increasingly important Chinese consumer segments, to help British companies to identify potentialopportunitiesandofferpracticaladviceonhowtosucceedin China.
I hope this report provides useful insights and stimulatesthinking. Please do get in touch with the team at CBBC: we stand ready to support your business success in China.
Stephen Phillips Chief Executive China-Britain Business Council
www.cbbc.org 01|
In addition to taking up a traditional role caring for grandchildren, the over 60 age group is starting to embrace consumerism and independence.
Background to The ReportThisreportisintendedtogiveUKcompaniesadeeperunderstandingofoneofthelargestandfastest-growingconsumersegmentsinChina–theover60agegroup.Itdiscusseswhotheyare,andwhattheydoandbuy,andexplainshowtheydifferintermsoftheirvaluesandlife-stagesoflife.
Theover60agegrouphasincreasedlifeexpectancyandhigherlivingstandards,yetretainsatraditionalearlyretirementexpectation.Inadditiontotakingupatraditionalrolecaringforgrandchildren,theyarestartingtoembraceconsumerismandindependence,oftenmakingupfortheirpooreryoungerlives.
Asyet,fewcompanieshaveattemptedtoservethegrowingneedsandaspirationsofthesematureChineseconsumersandhavenotmarketedtheirproductsandservicesdirectlytothem.
Thisreportfocusesonmarketsectorsfortheelderlyandmaturingconsumers,including:
• Productsandservicesfortheelderly–medicines,disabilitydevices,careservicesandhousing;
• Consumerproducts–electronicdevices,fashionandcosmetics,healthfoodsandsupplements;
• Education,tourism,leisureandentertainment;
• Financialservices–pensions,insuranceand wealth management.
Thereportisbasedonanalysisofmarketdataandindustryforecasts,andin-depthreviewsandinterviewswithotherexpertsandorganisations.Itisdividedintofoursections:
• Section1:Summaryofkeyfindings
• Section2:OverviewofthecauseandsizeofChina’sageingpopulation
• Section3:‘Silverconsumer’profilesandtrends
• Section4:Consumptionpatternsandopportunitiesinkeymarketsegments
|02www.cbbc.org
1.Key Findings
China’spopulationisageingrapidly.By2050,Chinawillbehometoaquarteroftheworld’selderlypopulation.OneineverythreeChinesepeoplewillbeolderthan60andamongthisoneinfivewillbeatleast80yearsold.In2015,thenumberofChinesepeopleolderthan60willexceed220million,morethanthepopulationsofUK,FranceandGermanycombined.
Thesamedemographictrendsaffectingtheworld,areaffectingChina’srapidlyageingpopulation:lowerfertilityrates,increasinglongevity,andtheageingofthebabyboomgenerations.DespitenotingtheimportanceofChina’sburgeoningconsumermarket,fewcompanieshavepaidenoughattentiontothematureconsumer,thusopportunitiesaboundacrossallsectors.
ThematuringconsumerwillbecomeasignificantpartofChina’sconsumptiongrowthoverthenextfewdecades,withtheirspendingpowerestimatedatathirdoftheeconomy,makingChinatheworld’slargest‘silvermarket’.Thismeanstherearetremendousopportunitiesforbusinessesthatshifttheirfocusandactfirstinfillingtheexistingmarketgapsbyadaptingand/ordevelopingproductsandservicestailoredtotheneedsofolderChineseconsumers.
Companies should note that it is not one homogenous market, but rather diverse andhighly fragmented. Consumer values and attitudes vary greatly across different generations.Understandingthosedifferenceswillhelpcompaniestoforeseethedirectionsinwhichconsumersareevolving,andidentifythetimetoenterthemarketandthesub-segmentstotarget.
Withincreasingincomesandawiderrangeofglobalexposureandconnections,China’ssilverconsumers are becomingmore financially secure, open-minded and adventurous. They arefoundtobemorepositiveforembracingnewtechnology,willingtolearnnewskillsandtotrynewthingsastheyhaveastrongerdesiretoimprovetheirqualityandenjoymentoflife.
Theyaredemandingandpursuingawidervarietyofproductsandservices,whichcanfittheirmodernlifestyles,rangingfromtheessentialssuchasmedicalproductsandhealthfoodtodiscretionaryitemsincludingfashion,consumerelectronics,travelandfurthereducation.
Whereasfiveworkerssupporteachretireetoday, in2050therewillbemorethanoneretireeforeverytwoworkers.Arapidlyageingpopulationandashrinkingtax-payinglabourforceareputtingmorestrainonChina’swelfareandsocialsecuritysystems,whichrequiresthefinancialsectortoactmorevigorouslytoprovidesufficientfinancialsecurityforChineseretireesnowandin the future.
www.cbbc.org 03|
2.OverviewoftheCause&SizeofChina’sAgeingPopulation
2.1|Workforce DemographicsIn2012Chinarecordedanabsolutedecreaseinitsworking-agepopulation(aged15-59)forthefirsttimesincethecountry’sopeningupinthelate1970s.1 China’sworking-agepopulationasshareoftotalpopulationwillfallto52%by2050fromitspeakatnearly70%in2010.
TheUNestimatesthatChina’sworkforcewillshrinkfrom938millionin2015to726millionby2050.The“demographicdividend”ofmassmobilisationofChina’spopulationintotheworkforce,whichhasdrivenitsrapidgrowthinrecentdecades,isdwindlingandissoontodisappear.
Furthermore,China’spopulationisageingevenfasterthantheworkforceisdeclining.By2050,every100potentialChineseworkers(aged15-64)willhavetosupport39peopleaged65+,morethanthreetimestheratiosreportfor2010.
China’sPopulation:AgeDistribution(millions)
Source:UnitedNations(UN)
Old-ageDependencyRatios(aged65+per100peopleaged15-64)
The UN estimates that China’s workforce will shrink from 938 million in 2015 to 726 million by 2050.
80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80
80-100+
60-79
15-59
0-14
Male Female Male Female Male Female
Age 1950 2010 2050
0Japan
10
20
30
40
50
60
70
80
Germany France UK China Brazil US Russia India
Source:UnitedNations(UN)
2010 2050
|04www.cbbc.org
2.OverviewoftheCause&SizeofChina’sAgeingPopulation
2.2| Life Expectancy & Birth Rates
Aselsewhere,peopleinChinaarelivinglongerandhavingfewerchildren–butthespeedofchangehasbeendramatic.
LifeExpectancy
• Increasedfromunder45yearsoldin1950to75yearsoldin2010.• Currentlylifeexpectancystandsat76yearsold,andisexpectedtoreacharound80by2050.• LevelsapproachingthatofdevelopedcountriesandishigherthanBrazil,IndiaandRussia.
FertilityRates
• Fellfrom6permotherintheearly1950sto4.8in1970inChina.• Aftertheone-childpolicy1 cameintoeffect,fertilityratesdropbelow2.1(thereplacementlevel
neededtokeepthepopulationsteady)bytheearly1990s.• It has now dropped and settled at a rate of 1.7 (lower than the UK, France and the US).
0
20
40
60
80
100
0 1 2 3 4 5 6 7
Source:UnitedNations(UN)
Fertility(numberofchildrenperfemale,1950)
Germany
UK France US
JapanRussia
S Korea
Brazil
CHINAIndia
Replacement rate0
20
40
60
80
100
0 1 2 3 4 5 6 7
Fertility(numberofchildrenperfemale,2010)
Replacement rate
Japan
Russia
S KoreaCHINA
India
UKFranceUS
BrazilGermany
LifeExpectancy(in1950) LifeExpectancy(in2010)
China’s population is ageing, due to a combination of rising life expectancy, declining fertility rates, and the ageing of historical baby boom generations.
1 One-childpolicy–couplesinurbanChinacouldhaveonlyonechild,orinruralareastwoifthefirstchildwasagirl.
www.cbbc.org 05|
Birthrate(per1,000people)
01949
10
20
30
40
50
Source:ChinaCompendiumofStatistics,CBBCestimates
1953 1957 1961 1965 1969 1973 1977 1981 1985 1990 2010 2030 2050
FirstBoom SecondBoom Third Boom
EnterRetirement
Firstgenerationofbabyboomers–AsinEurope,thepost-warperiod led to a surge in birth rates.Thisgenerationisretiredorretiring(60+yearsold).
Secondbabyboomcameafter‘TheGreatFamine’(1958-61)during which families postponed havingchildrenorhadlostyoungchildren. 2Thisgenerationisnowaround50yearsold.
The third smaller boom came withnewmarriagelaws,allowingChinese residents to marry younger(20yearsoldforwomenand22yearsoldformen).2 This generationisalsoknownasthe“One-childgeneration”duetotheone-child policies in place at the time,andtheyarecurrently25-35years old.
1949–1957 1962–1970 1981–1990
Chinahasexperiencedthreebabyboomssincethe1950s,whicharefurthercontributingtoitsageingpopulation.
2 Latemarriagerequirementsofthe1970sinChinastipulated23and25yearsforwomenandmenintheruralareas,and25and28yearsforwomenandmenintheurbanareas.
|06www.cbbc.org
By2030,the60+populationisestimatedtoreach370million(accountingfor24%ofthepopulation)andisforecasttorisefurtherto480millionby2050;thereforeaccountingfornearlyonequarteroftheworld’stotal60+population.The80+agegroupwillalsoreacharound120millionby2050.
TheUNdefinesacountryasageingif7%ofitspopulationis65+.In2010,26outof31provincesinChinareachedthislevel.Sixprovinceshadmorethan10%oftheirpopulationaged65+in2010,includingChongqing,Sichuan,Jiangsu,Liaoning,AnhuiandShanghai.
By2030,it isestimatedthatmorethantenprovinceswillhave20%oftheirpopulationaged65+.By2050,theproportionofthe65+agegroupisexpectedtoriseto30%ofthepopulationinsevenprovinces,concentratedontheeastcoastandnorthernpartofChina.
In 2013, the number of people aged 60+ reached 200 million, accounting for approximately 15% of the total population.
2.3| Rapidly Increasing NumbersIn2013,thenumberofpeopleaged60+reached200million,accountingforapproximately15%ofthetotalpopulation.Asthosefromthefirstbabyboomapproach60+,thiswillreach255millionby2020(18%ofthetotalpopulation).
PopulationAged60+(million)
02000
100
200
300
400
500
Source:ChinaNationalCommiteeonAgeing(CNCA)
2005 2010 2011 2012 2013 2014 2015 2020 2030 2040 2050
600
130170
221
371
483
18% 24% 30%
www.cbbc.org 07|
AgeingProvincesinChina>11%
10.5%
9.8%
9.1%
8.5%
7.8%
7.1%
6.5%
<6%
By 2030, more than ten provinces will have 20% of their population aged 65+, and over half of the 60+ group will be living in urban areas. Source:ChinaNationalCommittee
onAging(CNCA),ChinaResearchCenteronAgeing(CRCA)
2050203020202014
44%
49%
55%
71%
29%
45%
51%
56%
Urban
Rural
China’srapidurbanisationinrecentdecadeshasenabledthe60+populationinurbanareastomaintainsteadygrowth.Urbanareasarepredictedtoaccountformorethan50%ofthetotalnumberinthenexttenyears,andislikelytosurpass70%by2050.
PopulationOver60LivinginCities
|08www.cbbc.org
3.China’sSilverConsumers
Pre-1945
TraditionalGenerationAge:70+
LifeEvents ConsumerTraits Core Values
Influenced by war time turbulence in early life.
Predominantly poor, uneducated and rural.
Witnessed the founding of the PRC and strongly supported the rise of communism.
Part of Mao’s big push to industrialise China.
Conservativeattitudesandfrugal,mostinformedoftraditionalvalues.
Price-sensitiveandtendtosticktowhattheyknowratherthan trying new things.
Few are likely to embrace Western brands.
• Patriotism• Collectivism• Sacrifice• Frugality• Dutybeforepleasure
TheMaoGenerationAge:55-69
LifeEvents ConsumerTraits Core Values
Also known as the “Lost Generation.” Experienced famine in childhood (1958-61) and education interrupted by the Cultural Revolution (1966-76).
Many suffered unemployment caused by large-scale reforms of State-Owned Enterprises (SOEs) in the late 1990s.
Thrifty,buttypicallyhavemore children to support them.Somedesiretolivetheir remaining life to the full andhavestartedtoconsumeto compensate for years of deprivation.
ManyofChina’seliteoldleaders,whobuilttoday’smodernChina.Notnecessarily well educated or sophisticated,butsufficientlyopen-minded and demanding innovativeproductsandservicestailoredtotheirneeds.
• Adaptability• Socialism• Hardwork• Survival• Familyharmony
Today’s Silver Consumers
1946-1960 Today’s Silver Consumers
3.1|Attitudes,BehavioursandValuesChina’sdramaticchanges inthepast30yearshavegreatlychangedconsumerattitudesandbehaviours. However, the different generations still largely differ in consumption patterns,valuesandattitudes,oftenshapedbyearlylifeanddefiningeventsandexperiences.
CBBCinterviewedProfessorFlorianKohlbacherofInternationalBusinessSchoolSuzhou(IBSS)atXi’anJiaotong-LiverpoolUniversity(XJTLU),anexpertonageingandbusiness,andheexplainedthat “The silver segment is broadly defined as those people aged 50 and older. You cannot target the whole silver market in China; it is by no means one homogenous market segment. There are many segments that divide people into different generations with different values and attitudes. These values and attitudes determine the future trend of the silver market.”
Thefollowingtablerepresentsagenerationalcomparisonamongthekeyconsumercohorts.
www.cbbc.org 09|
1961-1970
TransitionalGenerationAge:45-54
LifeEvents ConsumerTraits Core Values
Young children during the Cultural Revolution.
First generation of a growing consumer market, with exposure to many Western brands in late 1980’s.
Some were fortunate to enter universities; some even studied abroad at government cost.
Affected by “one-child policy” during childbearing age.
RelativelyopentoWesternbrands and aspire to explore the outside world.
Stronglyinvestintheir“onlychild”–educationandmarriage.
Elitegroupsarewell-educated,sophisticatedandhavethepurchasing power to become higher-end consumers.
• Stability• Security• Humanism• Diversity• Child-focused
Post-MaoismGenerationAge:35-44
LifeEvents ConsumerTraits Core Values
Caught between the old and new China. Grew up with more personal freedoms than previous generations.
Many received a modern education. Part of China’s transitional development and new middle income group.
Last generation to grow up in extended families.
Adaptive,highlypragmaticandfacts-based. Family oriented and work hard to create financialsecurity.
NotnaturallyWesternised,but more familiar with foreign brands and products than their predecessors.
Lessconservative,morediversifiedandcomfortablebuying luxury goods.
• Pragmatic• Self-reliance• Conformity• Familycommitment• Practical
Tomorrow’s Silver Consumers
1971-1980 Tomorrow’s Silver Consumers
One-ChildGenerationAge:25-34
LifeEvents ConsumerTraits Core Values
Single focus of two parents and often four grandparents (“little emperors”).
Grew up entirely within the reformist era, global exposure and connections.
Part of China’s first wave of far-reaching economic change and growing pride.
Many obtained overseas study experience; greatly helped speed up China’s urbanisation trend.
Highself-esteem,selfishanddemanding.
Shiftinvaluesfromtraditionalcollectivismtoindividualismanduniqueness.
Modern,Westernisedlifestyle,andparticularlytechnology-savvy.
Valuework-lifebalanceandincreasingly focus on a wider varietyofleisureactivities.
• Individuality• Materialism• Optimism• Self-Confidence
1981-1990 Tomorrow’s Silver Consumers
|10www.cbbc.org
3.2Emerging TrendsAsidefromthedifferencesamongkeygenerations,thereareotheremergingconsumertrendsin the ‘silvermarket’whicharebelievedtobemoreprevalent in thenext fewdecadesandparticularlyrelevanttoaddressformarketers.
Olderconsumersarenotnecessarilyconservativeandpurelyprice-sensitive,theyoftenpursuevalueandqualityratherthanlowpricesastheyunderstandthatqualitycosts.Theyaremostlikelytospendmoreonhealth-relatedproductssuchasfoodandpharmaceuticals.However,thereisagrowingtrendinpurchasesofhigher-endgoodssuchaspremiumcarsandpersonalluxuryitems.
Willingnesstopayextrafor
quality
Althoughtheytendtosticktoproductsorstorestheyarefamiliarwith,theyarenotclosedtonewideas.Theyhaveastrongdesiretoimprovetheirqualityandenjoymentoflifeinretirementandtheyarelikelytomakechoicesbasedonexperienceandaconfidenceinknowingwhattheylike,andhavingthepatienceandself-confidencetolearnandtotrynewthings.
Opennesstonew ideas and
things
Changinglifestylesandtheincreasingprevalenceofchronicconditionshavemadeconsumersmoreconcernedabouttheirhealthandwell-being.Theyareincreasingtheirpurchasesofhealthfoodsandnutritionalsupplements.Whilealsopayingmoreattentiontotheiremotionalhealthbyparticipatingintravelandleisureactivities.
Healthandwellbeingoriented
China’s“Silversurfers”areembracingthedigitalagebydrivinggrowthinonlineshopping,onlinepaymentandsocialnetworking.Alibaba-China’slargeste-commercecompanyreportedithadtwomilliononlineshoppersovertheageof50in2013.Thetrendofdigitalconnectivitywillcontinueamongthesilversegmentasconsumersincreasinglyperceivethebenefitsandconvenienceofonlineactivities.
Digitalconnectivity
Somekey sectorspresentpotentialopportunities forUKbusinesses, ranging frommedicinetoelderlycaredevices,careservicesandhousing,healthfoodsandsupplements,consumerproductssuchaselectronicdevices,fashionandcosmetics,travel,leisureandentertainment,educationandfinancialservices.
www.cbbc.org 11 |
ThemarketforChina’solderagegroupsisstilllargelyunderdevelopedintermsofbothproductandserviceofferingscomparedtocountriessuchasJapan.Somemarketsarestillinthenascentstageofdevelopment,whileothersdonotevenexistinChina.
“Because many markets do not exist in China, you need to create them and that takes long-term investment and effort. But it is worthwhile and whoever acts first can be a pioneer and have market advantages,” said Prof Kohlbacher.
Hearguesthatself-perceivedagehassignificant impactsonconsumerbehaviour.Generally,mostfeeltenyearsyoungerthantheyactuallyare.Therefore,itisnotsuitabletoindicate“oldage”whenadvertisingproductstargetedtowardstheolderconsumers.
Headded“Demographics require companies to abandon the concept of solely targeting young customers. In the end, all managers will have to find ways to market to the old without either offending them or putting off younger consumers.”
Hehighlightsimportantconsiderationsformarketingtoolderconsumers:3
• Developingandmarketingproductsandservicesespeciallyforolderconsumers.
• Adaptingproductsandservicesespeciallyforolderagegroups.
• Age-neutralproductsandservicesthatoffervaluetotheolderagegroupswhilealsoattractingyoungerconsumers,suchasluxurygoodsandpremiumcars.
• Trans-generational products that can be consumed by all consumers regardless of age andparticularlybridgethegenerations.AsuccessfulexampleisNintendo’sgameconsolethe“Wii”.
4.1ElderlyCareProducts&ServicesMedicines
Chinaistheworld’sthirdlargestmarketformedicine,andsalesin2014were£65billion(up14%yearonyear).4 Drugconsumptionbythe60+agegroupistypicallytwoorthreetimeshigher than thatofanyothergroup; in2014,olderChineseconsumedmedicinesvaluedatnearly£45billion.Ifthemarketcontinuestogrowataround15%ayear,CBBCestimatesthatby2020medicinesalestoolderconsumerswillreach£90billion.
Foreignmanufacturers are still heavily reliant onoff-patentmedicines to increase revenuesinChina;roughly80%oftheirsalesin2014werederivedfromsuchproducts.Brandeddrugsenjoy hefty premiums, partly because locally made generics are of poor quality. However,China’sgovernmenthascommittedtomakinghealthcaremoreaffordablefor itsvastageingpopulation, and reforms that are underway aim to keep a tight rein on drug priceswhilepushinghigherqualityandinnovation.
Although foreign companies will face stiffer competition and upward pressure on prices,growingdemand fornewpatenteddrugs inChinawillhelp limit their lossofmarket share,believeBain&Company. And the sheer numbers of older age groupswill give rise to newpockets of demand for drugs.
In 2014, the over 60s consumed medicines valued at nearly £45 billion. And it is expected to double to £90 billion by 2020.
| 12 www.cbbc.org
4|OpportunitiesinKeyMarketSegments
Foreignplayersarelikelytocontinuetoleadininnovativemedicationtreatmentsforissuessuchashighbloodpressure,hyperlipidemia,diabetes,thrombosispreventionandasthma,aswellasissues suchasdepression.Opportunitiesalso lie inpreventive treatment forolderChinese insuchareasasvaccinationsforinfluenzaandpneumonia.ThetablebelowforecaststhenumberofChina’sageingpopulationwithcommonchronicdiseasesfrom2015-2050.
Mobility&Impairments
Chinacurrentlyhasnearly30millionpeopleaged60+withmobilityissues,70millionwithimpairedvisionand45millionwithimpairedhearing.Thesefiguresareestimatedtogrowdramaticallyintheyearstocome.Demandforassistivedevices–largelyconsistingofrehabilitation,mobilityaidproducts,hearingandvisualauxiliaryequipmentwillrise.
Arapidlyageingpopulation,especiallytheincreasing80+agegroup,willdrivedemandforelderlycarehospitals,rehabilitationcentresandnursingfacilities,whichareparticularlyunderdevelopedinChinaatpresent.Astheseinstitutions/facilitiesfurtherdevelop,demandformedicaldevicesisalsolikelytogrowsubstantially.
Chinese consumers have a strong preference for foreign-made medical devices due to theperception they are of higher quality and aremore reliable. Foreign companieswill find themostpotentialinthehigh-endsegment;however,evenprivateinstitutionsinChinahavelimitedexperienceinworkingwithadvancedmedicalequipment. It isthereforeimportanttoeducatethemarketaboutproductsandsolutionsandtoprovidecontinuoustrainingaswellassupport.
Numberof60+PopulationwithImpairment(millions)
Numberof60+PopulationwithChronicIllness(millions)
1
2
3
4
5
6
7
8
9
10
Hypertension
CerebrovascularDisease
Diabetes
ChronicObstructivePulmonaryDisease(COPD)
RheumatoidArthritis
IschaemicHeartDisease
Gastroenteritis
IntervertebralDiscDisorders
CholelithandCholecystitis
Cataract
19.7
3.9
3.7
3.4
3.1
3.1
2.0
1.9
1.1
0.9
Rank Diseases MorbidityRate*(%) 2015 2020 2030 2040 2050
44
9
8
8
7
7
4
4
2
2
50
10
9
9
8
8
5
5
3
2
73
14
14
13
11
11
7
7
4
3
83
16
16
14
13
13
8
8
5
4
95
19
18
17
15
15
9
9
5
4
Source:*CenterforHealthStatisticsandInformation,MinistryofHealth(2008),CNCA
Walking
Vision
Hearing
13.1
31.9
20.0
TypeofImpairment Incidence*(%) 2015 2020 2030 2040 2050
29
71
44
33
81
51
49
118
74
55
135
85
63
154
97
Source:*CRCA,CNCA
www.cbbc.org 13 |
ElderlyCareServicesandHousing
Changingfamilystructurescausedbytheone-childpolicyandrapidurbanisationtrends,meanthathalfofChina’sover60s(110+million)arecurrentlylivingalonewithnochildrenandthisisexpectedtoincreaseto70%by2050(when79millionofthemcouldbechildless).5
Thetraditionalfamilyhomecareapproachfortheelderlyisbeingchallenged,creatingavoidtobefilledbythegovernmentandofferingsignificantopportunitiesforprivatecompanies.Bothlong-term care beds and elderly care professionals are in great shortage.
Currently,only2%ofChina’selderlyopt for institution-based care, althoughat least10%arewilling to. Barriers remain as traditional values that elderly homes are built for childless orabandonedparentsandperceptionsofthembeinguncleanandlonelyplaces.Althoughthereareover94,000elderlycarehomesinChina,6thequalityofcarehasneverbeenproperlyregulated,oftenresultinginsubstandardconditions.
Overtime,China’selderlywillneedtobecomemoreopentoelderlycarecentres.Theywillpreferhousingwithcloseproximitytotheirfamilyandfriends,andtheywillattachhighvaluetogoodmedicalcareserviceregardlessofwhetherthereisanimmediateneed.Agrowingnumberofwealthy families are already embracing high-end nursing homes.
Forexample,CherishYearninShanghaiisanupmarketretirementcommunity,withmembershipfeesof£100,000andannualchargesof£3,000-£7,000. Ithashadnotrouble infinding1,300memberssinceopeningin2008.Itisplanningtoexpanditsbusinesstobuildresidentialpropertiesfor the elderly across China.
Themajoritywillstilloptforhome-basedelderlycare,butexistingresourcesarefairlylimitedinmeetingdemand.InfactmanyChinesepeopleareoftennotawareoftheavailabilityofmanyin-homeorresidential-basedcare,rehabilitationandcounselingservices.
Traininganewgenerationofcaregiversisgoingtobeaveryimportantandpotentiallylucrativesector,toprovideforthehigh-endin-homecareserviceneedsoftheemergingmiddleincomefamilies providing customised care, including housekeeping and companionship, safetysupervisionandphysicalassistance.
AnumberofinvestorsandforeigncompanieshavealreadyenteredintothebusinessofcaringforChina’selderly.ManyChinesefirms,asnewcomerstothesector,lackexperienceinoperatingelderlyhomesandprovidingqualitynursing careandare therefore seeking cooperationwithestablishedforeignplayers.Thisprovidesopportunitiesinrelevantsectors,rangingfromdesignand planning, training and education to operations, management, medical and healthcareequipment,aswellasdigitalsystems.
Foreigncompaniescanandhavealsosetupindependentelderlycareinstitutions,withoutajointventurepartner,andtheyarealsowelcomeparticipantsinimprovingstate-ownedelderlycareorganisations,andtodevelophigh-qualitychaininstitutes.7FormoredetailedanalysisonChina’selderlycaresector,pleaseseeCBBC’sreport“EnablingbusinessopportunitiesforUKcompaniesinChina’selderlycaremarkets”.
SupplyGapinNursingBedsandElderlyCarers
GovernmentTargetby2020
ExistingSupply2015
TotalSupplyGap
NursingBeds ElderlyCarers
Source:MinistryofCivilAffairs(MCA)
10.2million(35-40bedsper1,000elderly)
5.8million(27.5bedsper1,000elderly)
4.4 million
6million
<1millionOnly50,000arecertified
5 million
A growing number of wealthy families are embracing high-end nursing homes, while the emerging middle income families are looking for customised in-home care services.
| 14 www.cbbc.org
4.2Consumer ProductsHealthFoods&NutritionalSupplements
China is seeing a rapidly growing number of diet-related chronic diseases such as high blood pressure,diabetesandobesity.Chineseconsumers,especiallytheolderagegroups,arebecomingmore health conscious. Despite an aspiration for maintaining healthier eating habits as a topaspiration,accordingtoMintel(amarketresearchcompany),theyareturningtoself-medicationsuchashealthsupplements;vitaminsandmineralstostrengthentheirimmunesystemsandboosttheirenergylevels.8
InChina’s12thFive-YearDevelopmentPlan(2011-2015)forthefoodIndustry,nutritionandhealthfoodswereincludedasapriorityforthefirsttime.TheplanestimatedthattheoutputvalueofChina’snutritionandhealthfoodindustrywouldreach£100billionby2015(annualgrowthrateof20%),ofwhichhalfoftheproductsinthiscategorytargetmiddle-agedandolderconsumers.Thiswouldmeanthatthemarketforelderlynutritionandhealthfoodproductsispredictedtobeworth£125billionby2020.
OlderChinesetendtofollowtraditionalChinesemedicineandfoodtherapy.Howeverthedomesticmarket cannotmeet the demands for quality health food products such as organic food. Themajorityofthemarewillingtopayhigherpremiumsforfoodproductsdeemedtobehealthier,andtheyoftenassociatewell-knownbrandswithagreaterlevelofqualityandfoodsafety.
Consumersareskepticalofcertaingoodsdomesticallyproducedduetoaseriesoffoodscandals.Importedproducts suchasdairy, cereals andhotbeveragesaregainingpopularitydue to theirperceivedsafetyandqualityguarantees.TomeettheupgradingdemandofolderChineseconsumerswhohavehigherpurchasingpower,thereareopportunitiesforforeigncompaniesinregionalcitiesaswellasinthepre-existingpremiumproductmarket.
Holland&BarrettstartedinChinain2012andhavearangeofover700products.Theyseethe‘silvermarket’asaveryattractivegrowthsegment.Basedonthecompany’ssalesdata,productscontainingfishoil,lecithin,milkthistle,maca,proteinpower,calcium,multi-vitaminandglucosaminearetopofitssaleslist.Productswiththeseingredientscanhelpimprovecardiovascularhealth,liverfunction,boneandjointhealth,providinganti-fatigueeffects,aswellasboostingandfortifyingtheimmunesystem,whicharecommonlyrelatedtohealthdemandsofthemiddle-agedandolderpopulation.
“It has been estimated that China’s ageing population will push the country’s health industry growing at 20% over the next 10 years. This is a real opportunity for manufacturers of health and wellness products to prosper in China. Holland & Barrett will accelerate expansion in the Chinese market” AbeRan,SeniorMarketingManagerofHolland&Barrett.
For nutritional supplements, there is still a lack of knowledge, and strong beliefs in traditionalChinesemedicineaswellasconcernsaboutthesideeffectsofWesternproducts.Nevertheless,opportunitiesexistandaregrowingtotargetthe50-60agegroupandthechildrenofolderparents,who are more educated, open-minded and have greater trust in Western products. It is alsoimportanttoeducatemoreconsumersaboutproductqualityandvalue,especiallywhenitcomestosupplementsandothermoreadvancedproducts.
The market for elderly nutrition and health food products is predicted to grow at 20% annually to £125 billion by 2020.
www.cbbc.org 15 |
DigitalTechnology
Thenumberof Internetusersaged50+hasmore thandoubled in thepastfiveyears to52million.9Overa thirdof50-59yearold internetusers inChina identify themselvesasbeingfrequenttechnologyusersandthisrisesto41%forthe60+(comparedtoAsia-Pacificaveragesof19%and15%).10
CBBC found two key factors affecting older consumers’ adoption and eventual use of newelectronic devices are the cost of access and ease of use, but quality or durability alsoimportantconsiderationsastheyare less likelytoswitchtonewgadgetsonaregularbasis.Olderconsumersrequiremoretechnicalsupportinadoptinganewgadget;technologysuchasscreen-sharingforremotecontrolstoprovideliveassistancewillbeattractivetothesilverconsumer segment.
Agoodexampleisthegrowingpopularityofsmartphonesamongolderconsumers,thankstoChina’spioneeringsmartphonemakerXiaomi,whichtargetedtheolderagegroupswitheasytoreadtextandbigbuttonsonitsentry-levelHongMismartphone,withincreasingaffordability,greateruser-friendlinessandvariousconvenientappsforsocialisingorentertainment.
Increasingsocialmobilityandurbanisationisstimulatingdemandforinnovativegadgets,whichcanhelpalleviatefearsoflonelinessandisolation.Inaddition,olderconsumerswillincreasinglypursuedigitalhealthdevicessuchasbloodpressuremonitoring,wearablemedicalalertsystemsandvariouselectronicaidstoassistwithdailyliving.
Fashion&BeautyProducts
ManyofChina’snewgenerationofretireesareredefiningthetraditionalChineseconceptofoldage,instyle.Theyarenotallresistanttopersonalindulgence,theycontinuetotakeprideintheirappearanceandwantstyle,relevantfashionandbetterservices,astheyhaveastrongdesiretoenjoytheirsociallivesmore,regardlessoftheirage.
Althoughthereareeffortsbeingmadebysomeretailerstoprovideclothingandaccessoriesdedicatedtoolderwomen,mostlyinspecialistfashiondepartments,fewhaveyetsuccessfullymanagedtomarketappropriatelytotheirtargetconsumers.AccordingtotheChinaNationalCommitteeonAgeing(CNCA),thespendingpowerofChina’solderconsumersonclothingwillbeatleast£10billionby2020,yetlessthan10%ofproductsaretargetedatoldershoppers.
Whileinthebeautyindustry,suchasmake-up,skincareandhaircareproducts,companiesorbrandshavemadelittleornoattemptstoaddresstheneedsofolderChineseormarkettheirproductsorservicesdirectlytothem.Thereforealthoughwithmoneyinhand,olderChineseconsumers are not necessarily spending it on fashion and beauty items.
Mature consumers are more value-driven. They buy what they need and they are oftenpreparedtopaymoreforproductsofhighquality,goodmaterialsandtherelevantstyle/designthat will last them a bit longer.
AsChinesepeoplecontinuetoembraceconsumerism,thefutureover60sfashionmarket isalsogoingtomatureandbemorecompetitive.InterestedUKbrandshavearealopportunitytore-positiontheirproductsandservicestomeetthisunderservedsegmentandtoreapbenefitsbothintermsofprofitandinfluenceongenerationstocome.
Mature consumers are more value-driven and they are often prepared to pay more for products of high quality, good materials and relevant style/design.
|16www.cbbc.org
4.3Travel,Leisure&EntertainmentTravel
China’s travel and tourism industryhas expandedat abreathtaking speed, seeingdomestictourism growing at 12% annually while outbound tourism has grown at 15% annually, onaverage,overthepastdecade.1AccordingtotheBostonConsultingGroup,by2030Chinawilllikelybetheworld’slargestdomestictravelmarketandtouristsfromChinawillmakeupabout40%ofalloutboundAsiantravelers.
Olderconsumers, thatoftenhavemoremoney intheirpocketsand leisuretime,havebeenthemaindriverforChineseleisuretourism,bothathomeandabroad.China’slargesttouristinformation-sharingwebsite,MaFengWofound40%ofChineseretireesarewillingandabletogoonholiday.Italsofoundthattheywouldliketosetaside15%oftheirannualincomefortravel.Forexample,takingthecurrentaverageannual incomeofurbanseniorcitizenstobe£2,100,theirtotalspendingontravelisestimatedat£27billion.
CBBCfoundthreekeymotivatingfactors for theover60s’ travels: helping to improvewell-being,socialisingandrelaxation.
OlderChineseconsumersparticularlyprefertotravelwithcompanions,eitherinsmallgroupsoffamilies,andwithformercolleaguesorfriends.Theycommonly indicatethatprice is lessimportantthanwhotheyaretravellingwithandthedestination.11 Consumer preferences are alsoshiftingtowardslong-haultravel(mostlyincities),higher-costaccommodationandmorecustomisedtravelpackages.
Companiesshouldfocusoninnovativeanddifferentiatedproducts,offeringtravelexperiencesthataddresstheemotionalandintellectualneedsofolderChineseconsumers(suchasrelaxeditineraries, healthy meals, baggage delivery and essential medical services), but withouthighlightingthemasage-relatedneeds.
Marketers should also leverage online channels for product promotion and informationsharing,astheyoungerendofthe‘silvermarket’areincreasinglyoptingforindependenttravelandhavestartedtorelyononline travelsites/socialmediaplatforms for recommendations,informationandreservations.
Opportunitiesarenotonlyemerging for travelserviceproviders, suchas travelagents, touroperators, transport companies and hoteliers. Themarket is also growing in travel-relatedproducts,suchashigh-enddigitalcameras,travelinsuranceproducts,sportswear,shoesandtravelaccessories.Fewproductshowever,havebeencreatedspecificallytoservetheneedsandaspirationsofolderChineseconsumers.
Ma Feng Wo found 40% of Chinese retirees are willing and able to go on holiday. It also found that they would like to set aside 15% of their annual income for travel.
www.cbbc.org 17 |
Leisure&Entertainment
Higher incomes and rapid urbanisation are generating a growing demand for leisure andentertainmentinChina.Apartfromthetravelindustry,China’sperformancemarket,filmandTVsectors,aswellasartandpublishingindustrieshaveallexperiencedtremendousgrowthinrecent years.
OlderChinesearelookingforamoresophisticatedlifestylewithgreaterpersonalenjoymentandleisuretime.However,thismarketisstillrelativelyunder-servedinChina.
China’surbanyoutharemarryingandhavingchildrenlaterthanpreviousgenerations,eitherduetocareeraspirations,financialreasonsorlifestylechoices.Thismeansthatmanyelderlyparentsdonotimmediatelyfallintotheirtraditionalrolesasfulltimecaregiverstograndchildrenwhentheyretire.Manythereforehaveplentyoftimeontheirhandstoenjoythemselves–diningoutmore,goingtothecinema/library/park,takingupnewhobbiesandsports.
Retailers,hotelsandrestaurants,cinemas,theatres,museums,KTV(karaoke)clubs,entertainmentvenues, health and fitness clubs have the opportunity to offer special deals/events to olderconsumers by making them feel their age is being respected and rewarded.
InJapan,one-thirdofthevisitorstoamusementparksandotherentertainmentfacilitiesareagedfrom50to70.Themeparksandamusementparkshavebeencreatingmoreareasforolderagegroups,andfacilitiesaredesignedforthosevisitingasfamiliesofthreegenerations.Chinahasalsoseenan increasingnumberofentertainmentvenues,butdevelopershavenot rampedup theirattempts toappeal toolderconsumers,whoparticularly like toentertain ingroups,eitherwithfamily or friends.
A growing group ofmiddle income householdswill drive demand for family-friendly locations,where threegenerationscanhaveadaylongouting.Morepublic facilitiesareneeded forolderChinesecitizenstoenjoytheirentertainmentandleisurepursuitssuchasdancing,drama,musicandperformance,aswellastraditionalChinesegamessuchasMahjong.
There is alsoapotentialmarket forhomeentertainmentproducts for those thathavemobilitydifficultiesorprefertostayathome,suchaseBooksandtablets,digitalgames,homedecoratingand gardening products.
More public facilities are needed for older Chinese citizens to enjoy their entertainment and leisure pursuits.
|18www.cbbc.org
FurtherEducation
TraditionalChinesecultureadvocatesthatoneshouldkeeplearningtilltheendoftheirlife.Learningis seen as an important means of maintaining mental agility while helping people to contribute to societyratherthanbeingafinancialburden.AsChinesepeopleretireatayoungage(averageageis54)andmostremainfitandhealthyforoneortwodecades,theyneedmoreopportunitiestolearn.
Therearedifferentneedsandobjectives,whichrequirecarefulmarketresearchandsegmentation.Somewanttomaintainsocialengagementandwell-beinginretirement.Othersneedtoupdatetheirskillsandknowledgetoextendtheirworking livesorevenstartnewcareers.Somesimplywanttodevelopanewinterestwhileotherspursueacoursethattheydidnothavethechancetodo earlier in life.
ExistinginstitutionsthatcatertoolderagestudentsinChinaarepredominantlygovernment-funded,withtheirmainfocusonculturalandleisureeducation.AtShanghaiUniversityfortheElderly,classesaregenerallyofferedataround£20perterm,attractingmanyChineseretirees.However,thereisalimitednumberofplacesonthesecourses,resultinginthehighdemandbeingunmet.Nationwidethereareabout60,000elderlyeducationinstitutionsand7millionseniorstudents–lessthan5%oftheover60spopulation.12
Inrecentyears,ShanghaiUniversityfortheElderlyhasco-operatedwithcompaniessuchasCherishYearn(anupscaleseniorlivingcommunity)andGreenlandGroup(aleadingrealestatedeveloper)tosetuplearningprogrammesandtoprovideculturalservicestothecommunity.CooperationbetweeneducationinstitutionsandelderlycarefacilitieswillbeanewtrendandmaycreatepotentialopportunitiesforUKbusinesstoengageinfacilityconstruction,includingdesign&planning,furnishings,equipment,materialsandothersupplies.
“I am willing to pay for private classes, which I believe enable me to learn more efficiently, but I don’t know where to find qualified teachers”,saysMsTong,a50year-oldstudenttakinganEnglishclassatShanghaiUniversityfortheElderly.
Training courses, such as those for language skills, computer skills, the Internet and familyhealth will become increasingly popular among older Chinese.13 Meanwhile,growinginterestinoverseastraveldrivesdemandforshort-termstudytours.CBBCalsofoundthattherewillbemoreseniorswhodemandprofessionaltrainingforemployment,eithertosupportdependentsorsatisfytheirownfinancial/careerneeds.
ForeigncompanieshavebeenallowedtosetupSino-foreigncooperativejointventureeducationandtraininginstitutionsinsideChina’sFreeTradeZones.Inthelongrun,UKcompanieswillfindopportunitiestoentertheeducation/trainingsectorfortheolderagegroups,especiallyinthehigh-end segment. “In fact, more than half of the students at Shanghai University for the Elderly have a higher education qualification, and most of them held senior management roles before retirement”,saysMrLu,DeanforAcademicAffairs at the school. Those older age groups are mostlikelytopursueandbeabletoaffordhigh-endeducationalservices.
Nationwide there are about 60,000 elderly education institutions and 7 million senior students – less than 5% of the over 60s population.
www.cbbc.org 19|
4.4|FinancialServices&Products
This growing silver consumer segment is not only openinguppotentially lucrativebusinessopportunitiesformanufacturersandcareproviders,butalsoforthefinancialservicesindustry–whereChina,unlikemostdevelopednations,haspreviouslynotfocusedon.
Withdecentpersonalsavings inhandbuta lackof investmentoptions,theyhaveturnedtoparticipate invarious typesof investments, suchas ingoldandmostcommonly small scaletrading in thestockmarket.CBBC foundmanyolderChinesehavebecomeenthusiasticandrelativelysavvyinvestors,buttheyareleftlargelytorelyontheirownexpertisewhenengagingin financial trading due to a lack of financial services and investment products to aid theirdecision making.
Highsavingshabitsespeciallyamongolderconsumers
Chineseconsumershavestrongtendenciestosave,asthesocialsecuritysystemisimperfectandtheaverageretirementpensionremainslow,atpresent.Year-endhouseholdsavingsdepositsinChinareached£4trillionin2012,equivalentto77%ofGDP,butpensionassetstoGDP ratiowasmerely2.5%. In contrast,UShousehold savingsdepositsandpensionassetsrespectivelyaccountedfor3.5%and108%ofGDPin2012.WhileAmericanretireesare able to liveoff their pensionsor interest from investments, olderChinese typicallyspendsavingstofinancetheirconsumptionduringretirement.
Traditionalfamilysupportnetworkisbreakingdown
“Raisingchildrenforone’soldage”:Theideaoffamilyduty,obedienceandcareforone’sparents and elder family members are deeply ingrained in Chinese society. However,as urbanisation and economic development speed up, alongwith the influence of theone childpolicy, it hasbecome increasinglydifficult for adult children toperform theirperceived duty. Senior citizens are becomingmore economically independent; they donotwanttobeafinancialburdenontheirfamilies,soplanningfortheirfuturefinancialsituationisbecomingessential.
Chineseparentsare“haizinu”–slavestothe“Onlychild”
Atpresent,one-thirdofChineseadults, especially those from theone-child generationremaininsomewayfinanciallydependentontheirparents,mostcommonlyinpropertypurchases.14 This largely restricts older consumers’ spending on themselves. However,asnewgenerationsofolderconsumersaregoingtobemoreself-focused,thissituationwillgraduallychange.Companiesshouldfocusonprovidingbetterfinancialplanningandinvestment services to help grow,manage and preserve householdwealth.While alsosteppingupmarketingeffortstoconvinceolderChinesethattheydeservemore.
Shifting“fromcashtocashless”
ManyChineseare losingoldhabitsofpaying foreverythingwithcashandnotoncredit,partiallybecauseofthemeteoricriseofonlineretail.Nielsenfound45%ofover-55shaveat least one credit card.15Afurtherstudyfoundthat20%hadadoptedonlinebanking.9 The InternetwillreshapeChina’sfinancialindustry,asconsumersaregivenmorechoicestopayandtomanagetheirbankaccounts.Olderconsumers, inthefuture ifnotnow,willdrivegreaterdemandinonlinefinancialservicesincludingpaymentandsettlementservices,peer-to-peerlending,andpurchasesofinvestmentproductssuchasfundsandinsurance.
With decent personal savings in hand but a lack of investment options, they have turned to participate in various types of risky investments.
|20www.cbbc.org
Pensions
The financial services sector has huge potential, providing products and services for the 200millionChinese retirees.16 More importantly, China currentlyhas400millionpeople aged40-59and600millionaged30-59,sothereisanenormouspotentialcustomerbaseforfinancial/retirementplanningservices.
China’s ageing population along with its shrinking workforce put extreme pressure on thecountry’spensionsystemtoprovidesufficientfinancialsecurityforretirees.ThepensionfundshortfallinurbanChinabetween2012and2050isestimatedat£3.9trillion–equalto60%ofChina’scurrentGDP.17
The government has put continuous effort into reforming the pension system, includingencouraging pension funds to invest in capital markets, pushing to expand their investmentscope,diversifyriskandimprovereturns.WithanestimatedAssetsUnderManagement(AUM)of£2.8trillion,predictedbyZ-BeninChina’spensionsystemby2020,Z-Benforeseesforeignfundmanagerswillseehugegrowthinopportunitiesforbothonshoreandoffshoreinvolvement.
“Opportunities are two-fold. From the domestic stand point, foreign firms that have an entity on the ground are well-placed to take advantage of the growth in the domestic pension market, where reforms are expected to go with the creation of a holistic Public Pension Fund (PPF) to manage all the pension assets in China and greater taxation incentives are likely to be brought into play. And the other side will be in terms of getting mandates”,saysStephenBaron,DeputyDirectorfromZ-Ben.
TheNationalSocialSecurityFund(NSSF),whichhasbeenthemostlucrativesourceofpensionbusinessforforeignmanagers,islikelytobringmoreoffshoremandatesopportunitiesastheStateCouncilrelaxedrulestoallowonshoreassetsheldbythepensionfundtobeusedforoffshoreinvestments.Offshoremandatesarealsoexpectedintheothertwopillars,pensioninsuranceandEnterpriseAnnuities(EA)asAUMcontinuestoshootup.
“Foreign fund managers, with experience of managing pension assets, have a lot of advice and support to provide that will be highly regarded by Chinese counterparts”,saysMrBaron.Despiteitslargesize,China’spensionmarketisalmostcompletelyuntapped,asseeninthePPFwheremost assets remain in cash deposits. “When reforms happen, the international pension experience of foreign firms would be really critical and valuable to the domestic entities that are managing those pension assets.”
With an estimated Assets Under Management (AUM) of £2.8 trillion in China’s pension system by 2020, Z-Ben foresees foreign fund managers will see huge growth in opportunities for both onshore and offshore involvement.
www.cbbc.org 21 |
Insurance
Withrapidlyageingpopulationandincreasedlifeexpectancy,China’ssocialsecuritysystemwillstruggletocopewiththe largenumberof retireeswhodemand long-termpensionpayoutsandqualityhealthcareinthecomingdecades.Privateinsurers,bothdomesticandforeign,areexpectedtoplayabiggerroleinprovidingprotectionforseniorcitizens,rangingfromlifeandpension insurance to healthcare and long-term care insurance.
Premium income from the life-insurance sector increasedexponentially from£9.8billion in2000 to £140billion in 2013,18 makingChina theworld’s fifth largest life insurancemarket.However, lifeinsurancepenetration(premiumsasashareofGDP)andlifeinsurancedensity(premiumspercapita)remainlow,1.6%and£75respectively inChinacompareto8.3%and£2,300intheUKasof2013.19
Privatehealthinsurancerepresentsmerely8%ofthewholeinsurancemarket,despitethefactthatithasbeengrowingataround25%annuallyoverthepastdecade.20In2010,lessthan1%ofthepopulationwascoveredbyprivatehealthinsurers.21 Existingproducts,thoughtherearemorethan2,300types,lacktruedifferentiationintheabsenceofstandardisedmedicaldata.
Foreigninsurerscanexpectbetterperformanceinthemedium-andlong-termunderongoinghealthcareandfinancialreform,includingtaxincentivestostimulatethepurchaseofprivatehealthinsurance,priceliberalisation,andeasingofforeignshareholdingrestrictionsinlifeandhealthinsurancecompaniesinPilotFreeTradeZoneswhichhavebeenlaunchedinShanghai,Guangdong,FujianandTianjin.Therewillbe increasingpartnershipsbetweendomesticandforeign insurers to accelerate product innovation and development, and also to achievetechnologyandplatformsynergy.
China has become the world’s fifth largest life insurance market. However, life insurance premiums remain low on a per capita basis.
LifeInsuranceSector(2013)
0.00
2.0
4.0
6.0
8.0
10.0
12.0
14.0
500 1000 1500 2000 2500 3000 3500
Source:WorldBank,SwissResigmaNo3/2014
Thailand
Malaysia
RussiaCHINA
India
SouthKorea
Germany USA
Australia
France
Singapore
Japan
UK
Hong Kong
Penetration(%ofGDP)
Density-premiumspercapita(GBP)
| 22 www.cbbc.org
In 2013, 2.5 million Chinese people had an annual income of more than £99,000, 51% were aged 40-49, and 21% were aged 50+.
WealthManagement
Inthefirsthalfof2014,China’sbankingsystemreportedarecord£1.3trillionofoutstandingwealth-managementproducts–up24%fromthebeginningof theyear.Nielsen found70%of the over-55s have already purchased investment orwealthmanagement products. Afterexperiencing the drop in gold prices and volatility in the stock market, risk adverse olderconsumers have turned to bankwealthmanagement products that offer lower risk, stablereturns and ease of purchase.
In2013,2.5millionChinesepeoplehadanannual incomeofmorethan£99,000,51%wereaged40-49,and21%wereolder.22 Chinanowhasthesecondlargestpopulationofmillionaires(measuredinUSD)intheworld,withaffluentandmiddleincomegroupsalsogrowingintermsof both their numbers and their wealth.23
Foreign banks have been successful in high-end wealth management, particularly aroundoffshore investment offerings. This is forecasted to remain a high growth area as demandfor investmentmigration,children’seducationanddiversifiedassetallocationkeepgrowing.It ismoredifficult for foreignpartiestocompeteonshoreduetoregulatoryconstraints,butthereisstillanopportunityinthelong-termbysupportingotherbusinessunitsandbuildingcomprehensiveofferings.
Foreignbanksshouldcontinuetodifferentiatethemselveswithgreaterprofessionalism,widerproductknowledge,internationalexpertiseandresourcesinmobilebanking,onlinebanking,andhighqualitycustomerservicetocatertotheemergingaffluentinChina.
www.cbbc.org 23 |
Contacts
CBBCoffersawiderangeofservicesandbenefitsforUKcompanies.Pleasecontactustofindoutmore, including CBBCmembership, UK-China delegations, conferences, events, seminars,briefings and networking opportunities. CBBC has specific programmes around the ChineseConsumer,ChinaOutbound,EducationandLiveableCities.
CBBCworkshand-in-handwithUKTrade&Investmenttoprovidebusinessservices(inChinaandtheUK)includingmarketresearchandconsultancyservices,businessmatch-making,andfindingandpromotingbusinessopportunitiesforUKcompanies.CBBC’sownservicelineincludestheLaunchpadofficeincubationservice,eventsandconferences,businessadvisoryservices,trainingandtranslationservices.
WehavesectorexpertsbothintheUKandChinainthefollowingsectors:
CBBChasofficesandrepresentativesacrosstheUK:London,Scotland,Wales,NorthernIreland,EastofEngland,EastMidlands,NorthWest,SouthWest,WestMidlands,Yorkshire&Humberside
CBBC also has 13 offices in China: Beijing, Shanghai, Shenzhen, Wuhan, Chengdu, Qingdao,Nanjing,Hangzhou,Shenyang,Chongqing,Guangzhou,ChangshaandXi’an
CBBCUKHeadOffice3rdFloor,PortlandHouse,BressendenPlace,London,SW1E5BHTel:+44(0)2078022000
Author:TianjieHe,[email protected]
Contribution:Xiaoman Kang
CBBC works hand-in-hand with UK Trade & Investment to provide business services (in China and the UK) including market research and consultancy services, business match-making, and finding and promoting business opportunities for UK companies.
| 24 www.cbbc.org
Creative&Culture
Education&Skills
Retail
Food&Drink
Engineering,Manufacturing&Transport
LifeScience&Healthcare
Financial&Professional
ICT
Energy,Infrastructure&Environment
CBBCChinaHeadOfficeTheBritishCentre,Rm1001,ChinaLifeTower,16ChaoyangmenwaiAvenue,Beijing100020Tel:+86(0)1085251111
References
1 NationalBureauofStatistics
2 Coxhead,etal“DoSchoolsCauseStudents?EvidencefromChina’sPost-FamineBaby
Boom”,2014
3 Kohlbacher&Herstatt,“TheSilverMarketPhenomenon:Marketing&Innovation
intheAgeingSociety”,2011
4 McKinsey
5 NationalHealth&FamilyPlanningCommission(NHFPC),“ReportonChineseFamily
Development(2015)”
6 MinistryofCivilAffairs
7 MinistryofCommerceandMinistryofCivilAffairs–AnnouncementonMattersRelatingto
ForeignInvestors’EstablishmentofFor-profitElderlyCareInstitutions
8 BostonConsultingGroup“CapturingaShareofChina’sConsumerHealthMarket,From
InsightstoAction”,2014
9 ChinaInternetNetworkInformationCenter(CNNIC)
10 GFK,“Chinaleadingthewayinembracingnewtechnology”,Jun2014
11 Mintel,“MarketingtoOver55sinChina”,Feb2015
12 ChinaAssociationoftheUniversitiesForTheAged(CAUA)
13 Zhang,He&Kohlbacher“Op-ed:China’selderlyposenewchallengesfore-commerceand
e-learning”,Aug2015
14 The Chinese Research Center on Aging
15 Neilsen“ThreekeytrendsinChina’sFinancialIndustry”,Jan2015
16 DeputyHeadofChineseResearchCenteronAgeing,JunwuDang,ChinaDaily,Sep2014
17 MaJun&XiaoMingzhi,“ResearchintoChina’sstatebalancesheet”,2012
18 TowersWatson,“ThedaysofChina’sOldLifeInsuranceGrowthModelareNumbered”,
Feb2015
19 SwissRe,SigmaNo3/2014–WorldInsurancein2013:steeringtowardsrecovery
20 ChinaInsuranceRegulatoryCommission
21 InsuranceAssociationofChina
22 EuromonitorInternational
23 BostonConsultingGroup,“GlobalWealth2014Report”
Note:ExchangerateusedRMB10=£1.00
www.cbbc.org 25 |
Working in Partnership to grow UK-Chinatradeandinvestment.